Provisional attachment: Section 281B: Provisional attachment of bank accounts aggregating to over Rs. 33 lakh: Assessment raising demand of Rs. 9,62,378/-: Attachment should be restricted to the demand:

The bank accounts of the assessee aggregating to over Rs. 33 lakh were provisionally attached u/s. 281B. The assessee challenged the attachment by filing writ petition. In the mean while the assessment was completed raising a demand of Rs. 9,62,378/-. The assessee contended that the provisional attachment could be operative only up to the assessment and once assessment had been framed, the Revenue was entitled to attach the account to the extent of the demand raised and not all the bank accounts of the assessee.

The Punjab and Haryana High Court allowed the petition and held as under:

“i) The bank accounts of an assessee are provisionally attached to secure the interest of the Revenue pending assessment proceedings to meet the eventuality of demand of tax to be raised against such assessee. Once the assessment had been completed, the Revenue would be justified to attach the account to the extent of the demand raised against the assessee and not the entire amount standing to the credit of the assessee.

ii) The action of the Revenue in extending the period of attachment in respect of all the bank accounts of the assessee and in respect of over Rs. 33 lakh in these circumstances was wholly unjustified and illegal.”